Thursday, March 15, 2012

Afghanistan: Afghan Fuel Traders Complain of Turkic "Mafia"

Bridge connecting Afghanistan with Uzbekistan at Hairatan, a key crossing point. (Photo: US Air Force by Staff Sgt. Bradley Lail)

This article originally appeared in the Institute for War and Peace Reporting,

Afghan Fuel Traders Complain of Turkic "Mafia"

For Afghans trading with Central Asian republics, sharing the same ethnicity definitely helps.

Fuel traders in Afghanistan say they are being frozen out of the import business by suppliers in Uzbekistan and Turkmenistan whom they accuse of favouring businessmen from their own ethnic groups.

Seventy per cent of Afghanistan’s oil and natural gas is imported from Uzbekistan, Turkmenistan and Kazakstan, and most comes through the Hairatan crossing on the Afghan-Uzbek border. The northern trade route has become increasingly important as traffic Pakistan has got more complicated, for Afghan merchants as well as for NATO forces in need of fuel supplies. (See Afghans Accuse Pakistan of Obstructing Trade and NATO Purchases Leave Afghans Short of Fuel.) On Afghanistan’s western border, locals accuse Iranian officials of blocking fuel imports during the winter.

In the north, cross-border traffic should be simpler, but Afghan traders say they find it extremely difficult to do business with Uzbekistan and Turkmenistan unless they happen to come from the right ethnic background.

The traders claim businessmen from the former Soviet republics offer cut-price fuel to Afghan importers from their particular ethnic group, but inflate the prices for buyers of other ethnicities, making imports unaffordable for them.

Mohammad Ibrahim, a Tajik trader in Balkh, told IWPR the oil import trade had been monopolised by a small number of ethnic Uzbek and Turkmen Afghans.

“These traders have developed into a fuel mafia in the region,” he alleged. “They never allow anyone to import fuel other than themselves.”

Northern Afghanistan has a substantial Uzbek population in several provinces, and a smaller Turkmen community. They speak the same Turkic languages as people over the border in Uzbekistan and Turkmenistan, respectively.

The Afghan Chamber of Commerce and Industry said it was aware of ethnic bias in the import trade.

“Our traders are treated selectively by our northern neighbours, in ethnic and linguistic terms,” Mohammad Qurban Haqjo, chief executive of the chamber of commerce, said. “They not only mistreat traders who don’t have a connection with them, they create problems for them to make them give up this business.”

Haqjo suggested that this was something more than personal favouritism; it was common for neighbouring states to try to gain political influence in Afghanistan by dealing with those ethnic groups to which they felt closest.

Aref Kazemi, an economist in northern Afghanistan, said Uzbekistan and Turkmenistan both tended to give preferential treatment to their ethnic kin and political allies.

He said that on several occasions he had witnessed how businessmen with Uzbek connections, or an association with the Junbesh-e Melli party, being issued visas for Uzbekistan more quickly than others.

Junbesh is a political movement founded by General Abdul Rashid Dostum, a powerful figure formerly in command of a mainly Uzbek militia in Afghanistan.

Turkmenistan tended to focus aid activities on areas dominated by ethnic Turkmen and also Uzbeks, Kazemi added.

A diplomat from Uzbekistan denied favouritism was a state policy. Sherzod Makhdumov, economic attaché at the country’s consulate in Mazar-e Sharif said all trade was above-board and conducted without discrimination.

“We treat all traders who want to import or export through Uzbekistan equally, in accordance with [our] country’s laws, and regardless of ethnic, linguistic or other factors,” he said.

Turkmenistan’s consulate in Mazar-e Sharif referred questions on the matter to the country’s embassy in Kabul, which could not be reached for comment.

A major Afghan oil importer who is Uzbek by background said he had links with businesses in both Uzbekistan and Turkmenistan, but not with either government.

“Having contacts is vital,” he said. “These countries have very complex systems. Unless you know someone or have connections there, things that should take an hour will take days to get done.”

He added that it was just as crucial to forge strong relationships with Afghan officials so that they did not undermine one’s business. He said the oil import trade would become a lot fairer and more efficient if the Afghan government signed memoranda of understanding with neighbouring states to govern commerce.

“The absence of such agreements has allowed neighbouring countries [including] Central Asian states to treat Afghan businessmen however they want,” the trader said.

At Hairatan, mystery surrounds the question of who is involved in importing fuel. Customs chief Mohammad Aref Hamid said confusing paperwork made it all but impossible to determine who provided the financial backing. Import companies did not name their investors on official documents, and the business licences issued by the trade ministry were of little help, he said.

“We do not know what relationships exist between these countries and the real investors,” he said.

Hamid said he believed there were six companies involved in importing fuel, with one of them holding a particularly large market share.

“It’s true that the fuel trade has been monopolised by a few individuals and that others cannot compete with them. If a new trader enters the game, he will lose all his capital in the very first phase of doing business,” he said.

Trade ministry spokesman Wahidullah Ghazikhel said there were plans to try to break this monopoly by increasing the state’s share of fuel imports from three to 20 per cent, and issuing new import licences to traders from diverse ethnic background. Meanwhile, a bill on competition was designed to prevent larger companies from undermining smaller rivals.

Abdul Latif Sahak is an IWPR-trained reporter in Afghanistan.